Dec 12 - 18, 20

There is a growing consensus among the experts that Pakistan's prevailing energy crisis is due to heavy dependence on fossil oil/gas. Electricity generation is skewed towards thermal and there is also heavy reliance on natural gas.

Skyrocketing crude oil prices and failure to exploit alternate energy resources are the main causes of rising electricity tariff. However, only the successive governments could be held responsible for the prevailing dismal situation.

The two major changes in the lending policy of multilateral financial institutions 1) shift from hydel to thermal and 2) shift from public to private sector has added to the woes of Pakistan.

In fact, the cart has been put before the horse because of creations of independent power plants (IPPs) and transmission and distribution and loss making businesses held by the state.

Experts say it has become inevitable for Pakistan to change its energy mix. While various alternatives are available, the best remains hydropower generation. Creation of mega projects can help in overcoming two contentious problems facing Pakistan 1) creation of water reservoirs and 2) generation of low cost electricity.

Since the country has failed in developing consensus on construction of mega dams, the country should exercise the second option, construction of run-of-the-river projects. One of the examples is Ghazi-Brotha project. Apart from this, smaller hydel projects can be established in the northern areas.

Experts are of the view that Indus river alone can yield 40,000MW low cost electricity. The only hitch is finding appropriate locations and consensus has to be developed to avoid any controversy. The worst example is Kalabagh Dam, which could not be constructed due to opposition by Sindh and Khyber Pakhtunkhwa provinces. The resistance has been developed due to Punjab allegedly using water allocated for these two provinces. This mistrust could have been overcome by following better telemetry system.

Let one point be clearly understood by all the pressure groups and the policy planners that the solution of energy crisis is in construction of hydel projects and not in using gas for power generation.

The opponents usually put forward two arguments against construction of dams 1) inadequate availability of water and 2) water level going down in winter, which does not allow operation of hydel plants at optimum capacity.

The torrential rains and subsequent deluge in 2010 and 2011 have proved that the country would have not faced the destruction, had the gushing water could be diverted to reservoirs.

It is true that hydel generation goes down in winter but during this period shortfall can be met by operating thermal power plants on optimum capacities. The most recent observation is that thermal power plants (IPPs as well as Gencos) are operated at lower capacities to save fuel, which is the most absurd option.

The second best option is generation of electricity from Thar coal. Experts are of the opinion that annually 25,000MW electricity can be generated from Thar coal. The failure in exploiting this potential can be attributed to lack of interest and highly inadequate funds allocated by the provincial government. It seems that the provincial government wants the federal government to provide funds but it is not ready to give any ownership of the coalfields to the federation. Though much hype is created about Thar, its exploitation remains a dream. Added to this is opposition by environmentalists that also led to closure of Lakhra power plant. It was the only coal-based power plant operating in the country and the much talked about pollution was due to poor maintenance. Failure of management to take the remedial steps has virtually killed this project, despite the fact that indigenous coal was available.

Pakistan has over 1,200 kilometer long coastal belt, which offers the most conducive conditions for the construction of windmill parks. This option could not be exercised because delivery period of windmills runs into months/years. Pakistan failed to replicate Indian strategy. India also faced the same dilemma but instead of waiting, it entered into joint ventures/technology transfer agreements and started local production of windmills. Within a short span of time, it managed to generate over 8,000MW electricity from windmills.

Since the problem is grave, Pakistan has to find immediate solution. Sugar mills operating in Pakistan are capable of delivering up to 3,000MW electricity and producing huge quantity of ethyl alcohol for the production of E-10 (motor gasoline containing 10 per cent alcohol). The real advantage is that sugar mills use very cheap fuel (bagasse) and ample quantity of molasses is available for producing ethyl alcohol.

Experts say Pakistan is capable of doubling its sugarcane production without bringing additional area under its cultivation. These options cannot be availed because policy planners are not willing to offer bulk power purchase tariff being offered to IPPs and sugar mills. They say since sugar mills will use cheaper fuel, they can't be offered the same tariff. However, this incentive is necessary to enable the mills to run the power plants on alternate fuel till the time they manage to produce ample quantity of baggasse.

The government should also encourage industries and commercial buildings to go for co-generation. Some of the industries/commercial buildings have successfully done this and others should be encouraged to follow their footprints.

Two of the most efficient players are Finance and Trade Centre (FTC) and PSO House in Karachi. Many textile mills have gone for in-house generation, which is the second best option. It is necessary to point out that electricity demand of Karachi has exceeded 5,000MW out of this only half has to be met by KESC.

It is also suggested that instead of complaining about shortage of gas private sector should immediately finalize arrangement for the construction of floating LNG terminal. Still the better options are 1) government should resolve ongoing litigation of gas field which are capable of delivering around 1,500mmcfd gas and 2) another 500mmcfd can be recovered by containing UFG and theft.